Wednesday, December 27, 2006

Web 2.0 and "Rational" VC Investing

Couldn't resist a quick (snarky) comment here: the Wall St. Journal, in "Today's Free Feature" of this date, created an e-mail discussion between two venture capitalists on the dodgy subject, "Is 'Web 2.0' Another Bubble?" (via Techmeme)

Saying he saw no bubble forming, one of the gentlemen, David Hornik (a partner at August Capital), made the following astonishing statement:

"Venture capitalists will rationally stop investing in ideas that don't bear fruit."
As an editor, I yearned to append, "...once the bubble bursts."

Back during the dot-bomb days, I understood that VCs' M.O. was to fund 20 companies in a sector that could support one or two, in the hopes that one of theirs makes it. I may be a rube where high finance is concerned, but that sounds intrinsically bubbly to me.

Mr. Hornik seems to confirm this track record by later referring to, "...the irrationality of the Web 1.0 ascendancy." Yet he also states, "While many Web 2.0 companies will fail, they will not likely fail in significantly greater proportions than has been the case with other venture investments historically."

So was there or was there not an Internet bubble? Was the the year 2000 that long ago?
Winky Dept.
This could well be considered a risky post on my part, since I'm still hoping some angelic or partnerized investor will be interested in funding my own Breakthrough E-Commerce idea!

No comments: